December 4, 2013 Sections
Winnipeg Free Press - PRINT EDITION
Shelley Sauvé is not shy about speaking up about poverty. A single mom with two children with special needs, she has frequently spoken with the media about supporting the city's food bank, Winnipeg Harvest and the working poor.
By all accounts, the well-spoken, well-educated (she has an education degree) 39-year-old mother of a 10- and 17-year-old seems like an unlikely user of soup kitchens and food banks. Yet she is often forced to do so, even though she works as a teaching assistant.
Last year, she and her boys spent Christmas living out of her car when she couldn't pay the rent.
"Our rent was $1,100 and I was barely making that," she says. "Then, our rent went up by almost $300 a month."
Sauvé is one of many single-income earners in Canada heading up households on their own and struggling to make ends meet. Statistics Canada data reveal about 25 per cent of families are surviving on one income, while single parents account for a little more than 10 per cent of the overall makeup of Canadian families.
Many of them live below Statistics Canada's low-income cut-off -- Canada's version of the poverty line -- which is about $33,900 for a family of three in a city the size of Winnipeg.
On average, single-income families earn considerably less than double-income ones. The latest data from 2010 show single-income families earn on average less than $30,000 a year, whereas the average for dual-income families is almost $90,000.
Tax and estate-planning specialist Todd Sigurdson with Investors Group in Winnipeg says single-income earners often have to work more hours at more than one job, all the while paying more attention to how they spend their money. And that's just to stay afloat financially.
"In general, you've got a tighter budget to work with," he says. "In most cases, it means you've got less income, so you've got to be a little bit more determined to meet your objectives."
The investment and financial-services firm recently offered a list of tips for single-income families to save money (see fact box), such as taking advantage of tax credits and other government benefits for low-income families.
Yet even with the available tax breaks and benefits, most single-income families are scaling a slick slope out of poverty, says Lynne Fernandez, an economist with the Canadian Centre for Policy Alternatives (CCPA) in Winnipeg.
"You will find very few single-salary families by design out there," says the labour-force expert.
Many single-income families are headed up by women, and they tend to be the most economically disadvantaged, she says. In fact, single mothers are disproportionately among the poorest families in Canada, with a poverty rate of 23 per cent compared with a rate of nine per cent for all families.
A major challenge for many single-income families is child care.
"Daycare is ridiculously expensive -- if you can even find a spot," says Sauvé, who has never found affordable care herself.
CCPA has been lobbying for a nationalized daycare program similar to the one in Quebec, Fernandez says.
"It was very controversial at first because of its cost, but they have found that they have been able to more than pay for it because so many more women are in the workforce," she says, citing a 2011 Université du Québec à Montréal economists' study.
Of course, single-income families -- particularly those headed by women -- face more challenges than affordable daycare, she adds.
Many of these families are subsisting on minimum wages, she says. "There's not really any way a family can live on a minimum wage."
Social-policy organizations, including CCPA, have been pushing for an alternative to the minimum wage called a living wage. Fernandez says a living wage provides enough income to cover a "bare-bones budget" that covers rent, food, clothing, bus passes, child care and minimal recreation.
"It's just sort of enough to let you live on the margins with a certain amount of dignity," she says, adding New Westminster, B.C., became the first municipality in Canada to institute a living-wage policy for its workers and contractors. Several U.S. cities have similar ordinances.
For a single parent in Winnipeg, a living wage would be about $18.64 an hour with one child and $25.44 for two children, or about $52,000 annually before taxes, Fernandez says. In contrast, the minimum wage in Manitoba is $10.25 an hour. At full-time, that's about $21,340 a year before taxes and deductions, which is well below the low income cut-off.
Fernandez admits small-business owners would have a tough time paying a living wage, but the gap between the minimum wage and the living wage illustrates a need for better social supports for Canadian families.
"Theoretically, your living wage can come down if the government is providing more services -- for example, child care," she says.
"If it's going to cost you $600 a month to have a kid in child care, and all of a sudden the government is picking up $400 of that, theoretically your living wage can come down."
Sauvé says she earns about $20 an hour working almost full-time. Although she has worked three jobs to pay the bills in the past, she found it unsustainable because of child-care costs and the toll on her health.
She and her boys have since found an affordable place to live. The two bedroom apartment is small and the living room is her bedroom, but rent is only $800 a month. "At least we have a tiny kitchen and a bathroom, two things missing when we didn't have a place to live."
And Sauvé says she is grateful for what they have now, even though it often seems as though there's no light at the end of the tunnel. Still, she just keeps going, fighting to keep a roof over her children's heads and food on the table.
"Everybody always asks me 'So what's the solution?' but there isn't one easy solution," she says. "There are just so many issues involved."
WELFARE IN MANITOBA: Employment and Income Assistance provides comprehensive financial help to Manitobans with few other sources of income, if any. It covers food, clothing, personal and household needs, shelter, utilities, basic dental, optical, prescriptions and support to find work.
In 2012, about 31,000 Manitobans were on EIA, more than half of them on disability assistance. About 8,100 single parents were on EIA, down from about 9,500 in 2000. A single-parent family with two children between seven and 17 would receive about $1,032 a month from the province.
EIA participants must declare employment earnings, which reduce the amount of support they receive. "The EIA work incentive allows participants to keep the first $200 per month from their earnings, plus an additional 30 per cent of remaining earnings without impact to their EIA benefits," the ministry of Entrepreneurship, Training and Trade states in an email.
"EIA benefits end when a participant's earnings exceed 135 per cent of their basic monthly needs and expenses."
Not all single-income families are in dire straits. Some are getting by on one salary by choice. Regardless of the situation, here are some tips from Investors Group to make the most of one income.
Saving for education: If you have kids, you shouldn't pass on starting a Registered Education Savings Plan (RESP). Not only will the money grow tax-free until it's withdrawn, the government also provides the Canada Education Savings Grant, a 20 per cent top-up to a maximum of $2,500 in annual contributions. That's as much as $500 in grants annually. The grant is slightly more for lower-income families, and there is a lifetime grant limit per child of $7,200. Lower-income families can also qualify for the Canada Learning Bond. The federal government will provide a $500 contribution to an RESP for families that qualify for the National Child Benefit and $100 a year thereafter to a lifetime maximum of $2,000.
Hire a spouse: If you're self-employed, you might consider hiring your spouse for administrative and clerical duties. Todd Sigurdson with Investors Group says this allows the higher income-earning spouse to divert some business income to the spouse not earning any income, which reduces the family's overall tax burden. One issue that comes up, however, is the self-employed spouse will have to contribute to CPP and EI on behalf of the lower-income spouse (the employee).
Take advantage of tax credits and deductions: Several provincial and federal tax credits and deductions are available for single-income families, especially low-income ones. These include deductions for child-care expenses, the child tax benefit, which provides a monthly payment to low-income families with children, and spousal amount credit when one spouse earns no income. Single parents can also use the amount for an eligible dependent, which is similar to the spousal amount credit.
Consider insurance: Life and disability insurance are important to help manage the risk of loss of income for both one- and two-earner households. Life insurance is just as important for the non-wage-earning spouse, because the death benefit will help cover the cost of child care and other needs.
Republished from the Winnipeg Free Press print edition August 17, 2013 B12